Investors Optimistically Back To UAE Real Estate Markets

A new industry research states that after a significant slowdown, soaring property prices and rents, and rental yields higher than most global markets have brought investors back to UAE real estate markets in 2012. The “2013 UAE Real Estate Market Report” by Geopolicity is now available in the ever growing online business intelligence database at MarketReportsOnline.com It shows in the report that accelerated investment activity has also echoed the risk of speculative behavior, which overheated and eventually collapsed the market in 2008. Last December 2012, the UAE Central Bank announced plans to restrict Loan-To-Value (LTV) ratios for mortgage lending to expatriates and UAE nationals (50% and 70% respectively) – a move that has preoccupied industry debate and market recovery projections to ensure sustainable long-term sector recovery. While the details, or the exact capping levels, of the proposed regulation are currently the focus of negotiations with UAE banks, discussions have overlooked a larger, more systemic issue – the economic impact of mortgage restriction. Geopolicity takes a close up look at the current UAE real estate climate, and reveals the possible extent of GDP losses as a result of the proposed mortgage cap to contribute towards the ongoing debate.

The report also finds out that unless revised upwards, the cap would not only have a negative impact on growth across the UAE; it would have a particularly detrimental impact on the Dubai economy. While the move by central Government to better regulate the market is both necessary and welcomed to remove the risks of overheating and to lay the foundation for sustained and quality growth, the report highlights the need for multiple policy responses and a degree of moderation, at a time when both property prices and rental growth are beginning to recover. Moreover, as the UAE’s construction market regains its appeal to investors, with over $70 billion worth of construction awards in the pipeline in 2013, a detailed review of the options open to the market are urgently required, given the lessons learned in other countries living through boom and bust cycles. Designed to inform strategic investment decisions, the report offers unparallel insights into one of the world’s most dynamic real estate and construction markets, featuring analysis of sector governance, growth trajectory and drivers, demand and supply levels, and environmental issues. It provides data and forecasts for all core real estate product lines, including residential, office, retail and hospitality